My evidence for car leasing being a bad business is based on the £150 to £500 that each business makes on each car:
https://www.osv.ltd.uk/how-do-car-leasi ... nies-work/Moreover, most of the car manufacturers like VW have their own leasing business. In essence what has been created are a lot of banks. My experience of the financial industry tells me that these business will compete against each other to a level of stupidity. Similar to the way banks once got into selling houses (remember that time) and then the market crashed and the banks gave up on being property sellers, but for a time it was a good business..
All of these leasing business depend on being able to re-sell cars for fairly well quantified amount and if that was to go lower there will be trouble. Some folk tell me that buried in licensing agreements is the ability to demand more money of folk who have licensed cars if the re-sale value of the car falls below the actuarial calculations. That would be a fun situation if what I am told is true and the leasing companies start asking for substantial sums at the termination of the leases.
If all this was happening with out new competitors it would all sort it self out, but there are several new competitors coming. Dyson will likely sell just a fraction of the cars VW do, but Dyson is just one of several new entrants and as the car market is not going to expand to suit all there must necessarily be less sales for incumbents, exactly the sort of situation a manufacturer dreads. One has already seen this in the US with BMW having to issue a profits warning due to Tesla eating their lunch.
Note also that Tesla are using a direct sales method, no dealers and this has so many advantages that I expect other new auto will follow suit, Chinese, Dyson etc essentially cutting out the middle man. Existing auto will lobby against it as they have done in the US but they have not stopped it.
As you note electric cars are not suitable for some high mileage users and there will likely be some consumer reluctance to adopt electric as fast as the politicians would like. Hence I expect that we will see in the next 3-5 years a host of carbon taxes all around the world. The slight inconveniences of electric would then run up against substantially larger costs for ICE vehicles and force a switch to electric. Of course I can’t be certain this will happen but I believe it is very likely and Canada has already begun.
From the current perspective everything I am predicting looks wild and unlikely and it may never come to pass, but I believe there is a reasonable chance that the big changes brought by the ending of mass ICE transport and replacing it with electric will lead to very big changes in the auto market and that lessors and legacy auto are badly positioned. It is probably not going to be as devastating to legacy auto as cars were to horse drawn carriage makers but I believe it will cause changes that are substantial and that legacy auto even now does not fully appreciate what is coming and the threats to their business. Legacy auto imho remains too complacent and resembles the UK car industry when the Japanese began to ship cars. At that time it was inconceivable that the UK car industry would collapse but it did to be replaced by much smaller foreign owned business employing a lot less people.
I would not want to be in the legacy car or leasing industries but from the outside I think it will be an interesting few years.
Regards,
